DGCA looking at delicensing non-scheduled operators having less than three aircraft

As many as 80 of the 120 non-scheduled operators with less that three aircraft could lose permits to fly

To prevent private jet owners from evading customs duty by importing aircraft through the non-scheduled operator (NSOP) route, the Directorate General of Civil Aviation (DGCA) is looking at de-licensing all NSOP permit-holders which have less than three aircraft. Of the 120 NSOPs in service, as many as 80 stand to be de-licensed if the regulator amends the minimum requirements for grant of permits to non-scheduled operators.

The proposed change is also intended to address concerns raised by the US-based Federal Aviation Administration (FAA) regarding a safety oversight mechanism for non-scheduled operations. There are 52 NSOPs with one aircraft, 28 NSOPs with two aircraft, 13 NSOPs with three aircraft, and only 27 have more than three aircraft.

A senior official in DGCA said: “When we were reviewing regulatory requirements for NSOPs, we found most NSOPs fall in the general aviation category or perform limited charter operations for company executives. Private jets are often imported through the NSOP route to save on customs duty. We’ve decided that non-scheduled operators with less than three aircraft will not be permitted commercial operations, to plug such loopholes.”

Currently, an aircraft imported for personal use attracts import duties between 19 per cent and 21 per cent, while one imported for commercial operations attracts duties of 2.5-3 per cent only, as the latter is not subject to countervailing duty and special additional duty. This differential in tax structure has led many private jet owners to import aircraft through the NSOP route to save on customs duty.

Consolidation in the business aviation industry would also aid DGCA in strengthening its safety oversight mechanism for the category. “In the wake of the findings of FAA, the DGCA had constituted a committee to address the concerns raised by the US regulator. Once private jet owners are weeded out of the NSOP category, safety oversight would become more effective,” added the official cited above.

The FAA is to conduct a fresh audit of India’s safety oversight mechanism in December. The US regulator had downgraded India to category-II of safety ranking in January 2014, barring Indian carriers from expanding operations in the US. The DGCA has been working to meet all requirements pointed out by FAA to regain category-I status at the earliest.

Under the proposed amendment in the Civil Aviation Requirement (CAR), non-scheduled operators’ permit holders would now be required to have a minimum fleet of three aircraft or three helicopters — either through outright purchase or on lease. The aircraft shall be registered in India and shall hold a certificate of airworthiness in the normal passenger category. To facilitate the start of operations, the operator will be permitted to commence services with one aircraft/helicopter, but will have to increase the fleet size to three within a year of securing an NSOP permit. The existing NSOPs will be given an option to either raise their fleet size to three aeroplanes/helicopters under the revised CAR, or get themselves converted into the private category.

DGCA issued the notification to amend the minimum requirements for grant of non-scheduled operators’ permit on Monday. Stakeholders have to submit their comments by 12 November this year.

At present, DGCA issues permits to carry out commercial operations under scheduled and non-scheduled categories. However, though requirements are different for scheduled, non-scheduled and general aviation aircraft a single certification manual CAP 3100 is used for certification procedures for all commercial operators. The regulator is now in the process of segregating certification requirements and management by tailoring airworthiness requirements specific to each category.